Elder Fraud Epidemic: How Banks Are Failing Seniors

NEW YORK (MainStreet)—Elderly Americans have money. Their numbers grow daily. In some cases their mental capacities are diminishing. "It a horrible perfect storm for scams," said lawyer Steve Weisman, who teaches elder planning at Bentley University in Waltham, Mass. "The elderly are 12% of the population and 30% of the scam victims."

The Consumer Financial Protection Bureau estimates the extent of elder fraud at $2.9 billion - but the federal agency acknowledges that for every case that comes to the attention of law enforcement, 43 go unrecognized.

Add in the size of the country's elderly population - 50 mllion, with another 100,000 Baby Boomers joining the ranks daily - and this becomes a crime with exponential growth.

Elder fraud experts also say - loudly and in many cases angrily - that financial institutions could be doing a lot more to prevent a substantial amount of elder fraud.

But, first, understand how abruptly it happens. Ask Washington State resident Suzanne Perkins Newman, who one day discovered her aged mom had, in the space of perhaps one month, been robbed of around $9,000 by a caregiver. "My mom gave her her debit card, she was trusting," said Newman, who now runs the website Answers for Elders. The theft was detected when a relative who monitored the elderly woman's account noticed that, suddenly, there were many ATM withdrawals where before there had been none. "Why are you withdrawing so much money from your mom's account," she asked Newman - and quickly they realized it was the caregiver.

Philadelphia lawyer Debra Speyer can top that. A client of hers had an account looted of several hundred thousand dollars, and the culprit, said Speyer, was a bank employee. "My client had deposited an inheritance, and the bank employee had told her, 'only deal with me,'" said Speyer. That's what she did - until one day she discovered her funds were gone. Speyer analyzed the account activity and swiftly realized who the culprit had to be.